Trump, Inc., for President

For all that is different about this year’s presidential race, the one that, for the most part, has been overlooked is that Trump is the head of a closely-held family business. For lawyers, there is a big difference in how we look at publicly traded companies and those that are privately held. If a company is publicly traded, it has to file SEC reports and answer to a diverse group of stockholders. While officers and directors can engage in self-dealing, there is a clear separateness between them and the corporation. When a company is owned by a single person or family, lawyers are more likely to take a very close look at whether the owners treat the corporation’s assets as their personal assets or if they maintain an appropriate degree of separation. In other words, we look at whether the corporation and the person are truly separate or whether the owner treats the business as his alter ego.

Everything that we have seen in this race so far tends to indicate that Donald Trump is the Trump Organization and that the Trump Organization is Donald Trump. Throughout the primary, Trump held a lot of events at Trump Organization properties (with Trump Organization products lavishly displayed), This week at the convention, we saw this overlap in the news reports on Melania’s speech. Aside from what the plagiarism says about Trump Organization business practices and what that say about how Trump would govern, the bigger concern is how the Trump Organization just delegated somebody to work on the speech. (Given that Trump is the owner of the Trump Organization, the campaign laws issues is easily managed. Trump just has the Organization give him a dividend which he contributes to the campaign and the campaign pays back to the Organization — a mere paper transaction that complies with the law.)

If, before the election, Trump sees the Organization as a tool to further his personal ambitions, what happens after the election? Traditionally, a president (or other politician)with significant holdings puts them into a blind trust. In theory, because the politician does not know what changes the trustee may make to the portfolio, this practice prevents them from making decisions to benefit their personal stock holdings (e.g., deciding to change weapons acquisitions from the army to the air force because they hold Boeing stock). With Trump, there is simply no conceivable way that Trump could divest himself of his holdings in the Trump Organization. More importantly, while Trump may step down from day-to-day management, the new CEO will be one of his children (and we have already seen the key role that his children play in advising him). The first time that Trump tries to play hardball with another foreign leader, the logical response will be for that foreign leader to start talking about what that country could do to help or hurt the Trump Organization. If Trump wants China to take a tougher stance on piracy of movies and software, China may offer a good site for a Trump Casino in Hong Kong. Trump wants Mexico to do more on drug trafficking, Mexico may impose some new regulations that effect the Trump property in Baja. When the Trump Organization’s interests diverge from the U.S. interests, whom will Trump favor? The risk that Trump will sacrifice the U.S. to favor his company is simply to large for any reasonable person to take.